Ministers miss renewable cost pledge

Ministers have not met a pledge to update Parliament regularly on how much renewable policies are hitting energy bills, according to a report by MPs which calls for greater transparency on the issue.

The report on consumer-funded energy policies, published by the Public Accounts Committee (PAC), said the government has not published a report on the impact of renewable energy support mechanisms since 2014.

In that year, ministers said they would publish an annual report setting out how much extra energy consumers were paying to subsidise the cost of renewable generation.

The recommendation comes in a report examining the Levy Control Framework (LCF), a mechanism that is intended to help control the costs of three government schemes to support low-carbon generation.

The LCF sets yearly caps on the forecast costs of the three schemes – Renewables Obligation, Feed in Tariffs, and contracts for difference, which are funded through levies on energy companies and ultimately paid for by consumers via energy bills.

The PAC says a report on the consumer-funded policies, which was published by the Department for Business, Energy and Industrial Strategy (BEIS), is not an adequate substitute for a full assessment of the impact on bills.

The MPs recommend BEIS should publish a consumer prices and bills report on an annual basis, spelling out in an ‘easily understandable’ format what consumers can expect to pay to help subsidise low carbon generation.

The committee concludes the government must do more to demonstrate whether its consumer-funded energy schemes are delivering value for money.

The framework has “suffered from a lack of transparency, rigour and accountability”, whilst forecasting of the framework’s costs have been poor, says the report. It points to how the schemes are likely to add £110 to the typical household’s yearly energy bill in 2020, £17 more than budgeted for.

The mismatch highlights what the committee describes as a “culture of optimism bias” in the department.

The report urges BEIS to “foster a culture of openness and transparency” around its consumer-funded energy policies and work with HM Treasury to demonstrate the schemes provide value-for-money.

Commenting on the report, Energy and Climate Intelligence Unit energy analyst Jonathan Marshall said: “This report is the latest instance of clumsy policy turning a UK success story into negative news.

“We should be taking pride in the leaps and bounds made by renewable energy in the UK – from consuming power generated by the world’s largest offshore wind farm, to supporting projects around the world with legal and financial expertise.

“However, an inability to adapt and keep up with the pace of change in low-carbon technology, sub-par forecasting and incessant policy changes are having an unwelcome effect on customer bills.”